How to Verify Employment and Tenant Income in Utah
Every year, hundreds of thousands of tenants in Utah don’t pay their rent on time, leaving landlords without a consistent income stream. Many tenants weren’t eligible to rent properties in the first place because of insufficient income or irregular employment. This is why verification is so important for landlords in Utah. Just a few simple checks will prevent a costly eviction.
This guide will tell you the following information:
- How to verify the employment/income of employed and self-employed applicants in Utah.
- How to verify the employment/income of other types of applicants, such as students.
- The answers to common questions such as “Do apartments in Utah do background checks?”
Determine Your Eligibility Criteria First
Utah landlords should have a list of criteria for prospective tenants interested in their properties. Determining your eligibility criteria (and communicating this information to prospective tenants) not only prevents expensive violations for discrimination under the Fair Housing Act but reduces the risk of non-payment of rent.
Include a “triple rent rule” in your list of criteria, for example, applicants can’t spend more than one-third of their monthly income on rent. (If rent is $1,000, tenants should have a monthly income of at least $3,000). This affordability rule could prevent problems in the future.
How Do Landlords Verify Income and Employment in Utah?
The next step of the verification process depends on whether an applicant receives income from employment or self-employment.
Employment and income verification for employed applicants
Check employment details
Ask applicants for their employer’s name and phone number in your application form so you can verify employment details and mitigate risk.
You should ask employers for the following information:
- How long the applicant has worked for the company.
- How much money the applicant makes.
- How often the company pays the applicant (weekly, monthly, etc.).
Tip: It’s bad practice to ask employers for other information (for example, the applicant’s general behavior/personality) unless the applicant has permitted you.
Depending on the size of the company, some employers might not provide you with this information immediately, but you must verify an applicant’s employment/income details before you rent out your property.
Verify an employed applicant’s income in the following ways:
- Paystubs should be from the last 3 months.
- Paystubs should list the applicant’s year-to-date earnings.
- W2s list earnings from the previous tax year, proving an applicant has received a stable income over a longer period.
Income verification for self-employed applicants
Check employment details
Self-employed applicants work for several companies or have short-term contracts with various customers, making it difficult to verify their employment details. However, you can ask the applicant for a reference from an employer/customer if there is still a contract in place.
Verify a self-employed applicant’s income in the following ways:
Ask the applicant for bank statements from the previous 3 months (or longer, if you feel this is necessary). These statements show the average income received by the applicant during this period. Most applicants have access to bank statements (digital bank statements are just as valid as paper ones), but they can request additional statements from their bank for a small fee.
The applicant can file Form 4506 with the IRS to request a copy of his or her federal tax records from the previous tax year. The problem is, it can take the IRS up to 60 days to issue this form.
The applicant can file Form 4506-T with the IRS to request a copy of his or her tax return transcript from the previous tax year. Although this transcript doesn’t contain as much information as a full tax record, the applicant will receive this document in as little as 1 day.
Income Verification for Other Applicants
You might decide to rent your property to someone without a traditional income, such as a student or senior citizen.
Verify income for these applicants in the following ways:
Ask the applicant for bank statements from the previous 3 months (or longer, if you feel this is necessary). These statements show the average income received by the applicant during this period, including income from student loans, Social Security payments, and other government-issued benefits.
Savings account statements
Applicants might not have a regular income but enough money in savings to cover the rent for the whole tenancy. Ask the applicant for his or her most recent savings account statement. Applicants who don’t have a statement can request one from their bank for a small fee.
You can also verify applicants by asking for copies of government documents that establish any of the following regular payments:
- Social Security payments
- Retirement income
- Government benefits
If the applicant doesn’t have a document, he or she can request one from the relevant government agency for free.
Why Should You Verify Employment and Income in Utah?
Every year, thousands of people end up in Utah courts for non-payment of rent. By verifying the employment and income of prospective tenants, you can mitigate risk and foster good landlord-tenant relationships. Remember, it’s not illegal in Utah to refuse to rent to someone who can’t verify their employment and income!
Hire for Tenant Placement Services
Prospective tenants in Utah often want to know how to show proof of income and how landlords verify income. Asking them for the documents above helps you find the perfect tenants for your property. However, this process can take a long time. Our tenant screening and placement services will verify an applicant’s employment and income for you so you can concentrate on more important things.